InvestorQ : What is the CBDT angle that NDTV is talking about in the sale of stake to Adani?
Dilmini Mercia made post

What is the CBDT angle that NDTV is talking about in the sale of stake to Adani?

Dawn Cherian answered.
3 weeks ago

While the dispute over the stake sale of RRPR holdings to Adani has been going on for some time, the latest developments are interesting. The owners of the NDTV group, Prannoy Roy and Radhika Roy, have asked the Adani group to get CBDT (Central Board of Direct Taxes) approval before they can transfer the shares of RRPR Holdings. It may be recollected that the Adani group became entitled to 99.5% of RRPR holdings by virtue of conversion of warrants owned by VCPL. That will give Adani a 29.18% stake in NDTV.

Here is how the deal has worked out till date. Nearly 15 days back, Adani Media which is led by Sanjay Pugalia, acquired Vishvapradhan Commercial Private Ltd (VCPL). That acquisition entitled them to warrants which could be converted into a 99.5% stake in RRPR Holdings. As said earlier, this would have translated into 29.18% stake in NDTV. Prannoy Roy and Radhika Roy were against the deal as they had not been kept in the loop. First, they asked for SEBI approval. Now, Roy family wants Adani group to get approval from CBDT to transfer shares.

Let us understand this CBDT angle better. Back in November 2019, the promoters of NDTV, Prannoy Roy and Radhika Roy, had been barred from dealing in the shares of NDTV, selling stake in NDTV or entering into any deal that would encumber their assets in any way. At that point, the idea was that the actual tax liability of the Roy family in the original loan deal of 2009 was higher than stated and till that was finalized their shares would remain frozen without permitting any leeway to the Roy family to deal in those shares.

The contention of the CBDT at the time of passing the order was that NDTV promoters had avoided taxes in 2009. That was done by cloaking a stake sale transaction as a loan. The order by CBDT had put the ban on both the promoters and their holding company to be valid till the issue was fully sorted out. Now Prannoy and Radhika Roy are using that CBDT order as a pretext to not transfer the shares of RRPR Holdings to Adani. Their stand is that due to the ongoing ban, prior CBDT approval is required. It does sound peevish.